Pattie Lovett-Reid: When it comes to rewards, cash is king

Pattie Lovett-Reid: Most Canadians don’t redeem their rewards points

When it comes to rewards, only 3 in 10 ever even bother to redeem their points, according to financial services company Bankrate, while 38 per cent tend to do so within a six-month period.

This doesn’t make a lot of sense to me, as you often pay a fee associated with the rewards/points and they don’t typically increase in value. Yet we continue to like our rewards – and it’s a competitive environment out there to get your business.

When it comes to the most popular reward, cash back is by far the most attractive feature leading the way. Forty-seven per cent lean towards cards offering this feature, airline tickets come in a distant second at 17 per cent and gifts rounding out the top three at 12 per cent.

It would appear that cash is king for a growing number of Canadians drawn to the simplicity of cash-back credit cards. For some put off by the complexity and sometimes unfavourable changes to travel reward programs, cash back cards can make a lot of sense.

Patrick Sojka, founder of rewardscanada.ca, says if you are spending more than $3,000 per month on your credit card, a cash-back feature not only provides meaningful rates of return, but most of these cards also come with great perks including medical and travel insurance.

Here is another reason to use your points: the features can change and catch you off guard. Cards offer promotional perks that can also change in a moment’s notice. Cardholders beware.

The top 3 cash back cards, according to rewardscanada.caare:

1. SimplyCash Preferred Card from American Express. Strong promotion offer of 5 per cent on first six months of spending (cap of $300) and 2 per cent on all future spending. Plus strong insurance package vaults this revamped card to the top of the list.

2. MBNA Rewards World Elite MasterCard. Strong sign-up offer of 10,000 points ($100 value) on first purchase, 2 per cent rate of return on all future spending, plus flexibility to cash out monthly makes this card a strong runner up.

3. Scotia Momentum Visa Infinite Card. A former champ, this card has lost some ground due to supplementary cards fees and a less-than-appealing return of 1 per cent on all non-category purchases.

Millennials tend to gravitate toward the cash back feature at 67 per cent, while Boomers like the feature 64 per cent of the time.

If you are going to use a credit card, pay an annual fee. It just makes sense to ensure the bell whistles are what you are looking for and you use them.